LVR (WA) Pty Ltd v Administrative Appeals Tribunal

Counsel for the Second Respondents: Mr S Owen-Conway QC

Solicitor for the Second Respondents: Australian Government Solicitor

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 228 of 2010

JUDGE: GILMOUR J DATE OF ORDER: 6 October 2011 WHERE MADE: PERTH

1. The application dated 15 July 2011 be dismissed.
2. The applicants pay the costs of the second respondent to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 228 of 2010

JUDGE: GILMOUR J DATE: 6 October 2011 PLACE: PERTH

REASONS FOR JUDGMENT 1 The applicants (LVR) and (CZ) seek judicial review of the decision of the first respondent (the Tribunal) of 30 July 2010 to dismiss their applications under s 42A(5) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) (the Decision). The Tribunal dismissed Applications for Review of the disallowance of objections to various assessments and notices of penalty issued by the second respondent (the Commissioner) against the applicants for non-compliance with directions made on 26 August 2009. These liabilities are approximately $24.5 million in the case of LVR and $2.35 million in the case of CZ.

Background 2 The Tribunal made directions on 26 August 2009 in the same terms in relation to each of the above named applications ["the Relevant Directions"]. It should be noted that there is a typographical error in para 4(b) of the Relevant Directions where the reference to "paragraph 1" should be a reference to paragraph 2. The Relevant Directions were varied by the Tribunal on 20 November 2009 by extending the time for filing. The Relevant Directions related to the manner in which the applicants' voluminous evidence including witness statements should be (re)filed. This was to be the third time the applicants' evidentiary material would be filed. Previously filed evidence had been substantially uplifted by the applicants because it did not comply with earlier directions. 3 The applicants filed 77 lever arch files of documents in response to the Relevant Directions in December 2009 and January 2010 ["the Relevant Documents"]. At the same time and also in response to the Relevant Directions the applicants filed 2 witness statements in addition to those previously filed. The witness statements on which the applicants rely are listed at the Schokker "Master Index". These are in annexure HBS2 to the witness statement of Hank Schokker of 3 May 2010 ["the Relevant Witness Statements"]. 4 At a Directions Hearing on 19 March 2010, the Commissioner asked the Tribunal to set the matter down for a Dismissal Hearing on the grounds that the applicants had failed to comply with the Relevant Directions. The Tribunal then made directions for filing of affidavits by the parties prior to the Dismissal Hearing. 5 The Tribunal set out at [9] of its reasons a brief chronology of the filing of the applicants' evidence since the filing of the applications in 2007. 6 Paragraphs 2-4 of the Relevant Directions, as corrected, are as follows: 2. On or before 28 October 2009 the applicants must each file with the Tribunal and serve on the respondent a copy of every document they propose to adduce in evidence at the hearing, to establish that the assessments of income tax, GST and penalty are excessive, in the manner and form specified below: a. A list of documents should be prepared in which: i. documents should be numbered and specifically described or arranged in groups and sub-groups with a number and description for each group and sub-group; ii. each document in a group or sub-group of documents should be arranged in chronological order and paginated; iii. page number references should be given for each document and a range of page numbers for each group and sub-group; iv. the groups should include the categories listed below; GST b. Net amounts in Business Activity Statements [amended objection: CZ second paragraph, LVR second paragraph] - the applicants' calculations of each item in each relevant BAS. c. Input tax credits [amended objection: CZ paragraph 3, LVR paragraph 3] i. A list of the input tax credits claimed on acquisitions made by the applicants in the course of developing and subdividing the land. Supporting documents for each acquisition include a copy of the tax invoice and relevant bank statement showing the date of payment of each invoice (or other proof of payment). ii. Development expenses Mammoth [SFC: CZ paragraph 18.3 and 18.4, LVR paragraph 18.3 and 18.4] - A list of the input tax credits claimed on acquisitions made by the applicants from Mammoth Investments Pty Ltd in the course of developing and subdividing the land including a detailed breakdown of the supplies provided. Supporting documents to include: 1. the tax invoices for each service provided 2. the relevant bank statement (or other proof of payment of each invoice) 3. the original tender document submitted by Mammoth Investments Pty Ltd as head contractor for the development projects 4. 3rd party certifications/authorisations for progress payments to Mammoth Investments Pty Ltd or Mammoth Nominees Pty Ltd 5. Any other relevant documentation. d. Land purchases [SFC: CZ paragraph 15, LVR paragraph 15] - supporting documents include copies of the relevant contracts of sale, settlement statements, elections to use the margin scheme or other supporting information demonstrating an intention to use the margin scheme. e. Loans for each purchase [SFC: CZ paragraph 18.1, LVR paragraph 18.1] - supporting documents include copies of the loan agreements, copies of loan statements showing the amounts of interest paid. f. "Shortfall amounts" to settle the purchases of land [SFC: CZ paragraph 18.2, LVR paragraph 18.2] - supporting documents include a list identifying the amount of each shortfall payment, to whom it was paid and what the payment was for, as well as copies of bank statements showing the payment of the shortfall amounts. g. Land sales [SFC: CZ paragraph 17, LVR paragraph 17] - a list of sales of land including name of purchaser, date property sold, amount sold for, contracts of sale, whether margin scheme applied, calculation of GST liability. h. Proceeds from land sales [SFC: CZ paragraph 18.6, LVR paragraph 18.6] - supporting information in respect of each sale includes settlement statements, relevant bank statements identifying receipt of settlement proceeds and relevant bank statements identifying date and amount of repayment of relevant loan. i. Each applicant's indebtedness to Mammoth Investments Pty Ltd [SFC: CZ paragraphs 19-20, LVR paragraph 19-20] - table demonstrating the calculation of the debt and the date and amount of the reduction of the debt by the application of the proceeds of land sales, relevant bank statements of the applicants and Mammoth Investments Pty Ltd [and Mammoth Nominees Pty Ltd] showing payments of amounts owing or transfer of net balances, copies of relevant pages of accounting ledgers of the applicants, Mammoth Investments Pty Ltd and Mammoth Nominees Pty Ltd demonstrating the indebtedness. INCOME TAX [SFC: CZ paragraphs 26-29, LVR paragraph 29-33] j. "Income" for each year of income - supporting documents include each applicant's calculation of the income, any additional bank statements or other documents verifying the receipt of income if not provided above. k. "Cost of goods sold" for each year of income - supporting documents include each applicant's calculations of the cost and identification of the goods sold in each year. l. "Development expenses" for each year of income - supporting documents include each applicant's calculation of the development expenses, any additional invoices and relevant pages of bank statements showing payment if not provided above. m. "Interest and fees" for each year of income - supporting documents include each applicant's calculation of the amount claimed, any additional statements or invoices and relevant pages of bank statements showing payment if not provided above. n. "Development expenses Mammoth" for each year of income - supporting documents include each applicant's calculation of the development expenses, any additional invoices and relevant pages of bank statements showing payment if not provided above. ADDITIONAL WITNESS STATEMENTS 3. On or before 28 October 2009 the applicants must file with the Tribunal and serve copies on the respondent any additional witness statements they intend to rely on at the hearing. MASTER INDEX 4. On or before 28 October 2009 the applicants must file with the Tribunal and serve a copy on the respondent a master index listing all the witness statements they intend to rely on at the hearing including the following: a. in respect of each witness statement the name of the applicant in respect of which the statement is filed, the name of the witness and the date of the statement; b. each witness must identify from the list of documents referred to at paragraph 2 above the particular documents or groups of documents the witness will rely on by referring to the relevant document numbers. 7 The chronology leading to the "Interlocutory hearing - Dismissal application" and the decision of the Tribunal on 30 July 2010 is set out below: Date Event 19 March 2010 Tribunal made Directions:  Second respondent to file and serve affidavits setting out the grounds for the respondent seeking dismissal by 12 April 2010  Applicants to file any affidavits in reply by 3 May 2010  The applications to be listed for a dismissal hearing. 12 April 2010 Commissioner filed and served affidavits of Julie Coates and Sandro Mancini 3 May 2010 Applicants filed and served a "Master Index" and witness statement of Hank Schokker 11 May 2010 Tribunal listed the "Interlocutory hearing - Dismissal application" on 24 June 2010 14 May 2010 Applicants filed and served an affidavit of Hank Schokker 31 May 2010 Commissioner filed and served an affidavit of Sandro Mancini in response to Hank Schokker's witness statement of 3 May 2010 21 June 2010 Applicants filed and served an affidavit of Hank Schokker 23 June 2010 Commissioner's written outline of submissions filed and served 24 June 2010 "Interlocutory hearing - dismissal application" before Senior Member Sweidan 24 June 2010 Tribunal made Directions  Applicants to file and serve closing submissions by 8 July 2010  Second respondent to file and serve closing submissions by 15 July 2010 8 July 2010 Applicants' filed and served closing submissions 15 July 2010 Commissioner filed and served closing submissions 30 July 2010 Tribunal's Decision and Reasons for Decision published

The amended application for review dated 15 July 2011 8 The grounds for review, in summary, are that the making of the Decision was an improper exercise of power conferred by s 42A(5) of the AAT Act within the meaning of s 5(1)(e) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act") because the Tribunal: (i) failed to take into account relevant evidence; (ii) failed to take into account extreme prejudice to the applicants; (iii) acted in a manner so unreasonable that no reasonable person could have exercised the power within s 5(2)(g) of the ADJR Act; (iv) took into account considerations that were irrelevant. These grounds overlap to a considerable extent. 9 The applicants did not press ground 14 which was that the decision was contrary to law within the meaning of s 5(1)(j) of the ADJR Act. 10 The applicants, at the hearing, sought leave to amend their grounds of review by reinstating a ground earlier deleted by amendment: that the Decision involved an error of law within the meaning of s 5(1)(f) of the ADJR Act. The particulars to the proposed new ground 14 assert that the Tribunal misconstrued the Relevant Directions in various respects. This is not capable of amounting to a relevant error of law. Moreover the applicants' reliance on s 43(2B) of the AAT Act is misconceived. It does not apply to a decision under s 42A(5) of the AAT Act to dismiss an application "without proceeding to review the decision". Section 43(2B) applies rather to the Tribunal's decision on review. I would refuse leave to amend in this respect for these reasons. The other proposed amendment to ground 13.1 and to particular (b) in ground 13.2 seek to add the word "submissions" before the word "evidence". Likewise I would refuse leave to make these amendments. They would add nothing of substance to the applicants' grounds.

Judicial review 11 The relevant law is not at issue here, only its application. Judicial review is generally restricted to grounds which amount to error of law, whereas judicial review for error of fact is generally not embarked upon unless the fact is jurisdictional. 12 In Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36, Brennan J described the duty and jurisdiction of the Court on an application for judicial review in the following way: The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone. 13 The confines of judicial review, in the same vein, have been emphasised since Attorney-General (NSW) v Quin by the High Court in a number of cases including Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; Abebe v Commonwealth of Australia (1999) 197 CLR 510 at [195]; and Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 at [43]-[44]. 14 Importantly it must be remembered that it is not the function of the court to substitute its own decision for that of the administrative tribunal exercising power which the legislature has vested in that body: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 40-41. 15 In Minister for Immigration and Citizenship v SZJSS (2010) 273 ALR 122, the High Court has recently reaffirmed this principle in holding that courts should not delve into the merits of administrative decisions on the ground that the decision-maker did not give "proper, genuine and realistic consideration" to the evidence before it. The Court held that the weighing of evidence and the preference for some evidence over other evidence, is a matter for decision-makers, not for courts exercising supervisory jurisdiction. 16 The reasons for an administrative decision are not to be minutely and finely construed with an eye keenly attuned to the perception of error. The reasons of an administrative decision maker are meant to inform, and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed: Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 271-2; SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 at [25]. The reasons under challenge must be read as a whole and must be fairly read: Cross v McHugh [1974] 1 NSWLR 500 at 503; Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 291.

Improper exercise of power 17 The ground of review that the making of the Decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made is defined in s 5(2) of the ADJR Act to include specific matters. 18 The word "improper" does not mean simply wrong or incorrect. It relates to something which, for some reason known to the law, is not a proper exercise of power: Borkovic v Minister for Immigration and Ethnic Affairs; Knezevic v Minister for Immigration and Ethnic Affairs (1981) 39 ALR 186 at 189. 19 A ground of appeal which alleges that the court or tribunal has failed to take into account a consideration which, in the circumstances it was bound to take into account, alleges an error of law: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 39-40. 20 However, a tribunal or court will not err in law merely because some piece of evidence which the court thinks is relevant in the evidential or probative sense can be seen not to have been weighed or discussed. "Relevant" for this purpose means the decision-maker is bound by statute or by-law to take this into account; Minister for Aboriginal Affairs v Peko Wallsend Limited at 40-42; Rezaei v Minister for Immigration and Multicultural Affairs [2001] FCA 1294; Singh v Minister for Immigration and Multicultural Affairs [2006] FCA 1113 at [22]-[34]; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [82]. Similarly, a court or tribunal will not err in law merely because it fails to place "adequate weight" upon a consideration which is bound to take into account: Minister for Aboriginal Affairs v Peko-Wallsend Limited at 41. 21 The ground of failure to take into account a relevant consideration will only be made good if it is shown that the decision-maker has failed to take into account a consideration which he was, in the circumstances, bound to take into account for there to be a valid exercise of the power to decide: Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363 at 375. However, an allegation of a failure to take relevant considerations into account cannot be used as a cover for challenging the factual correctness of a decision: Mendoza v Minister for Immigration, Local Government and Ethnic Affairs (1991) 31 FCR 405 at 420. 22 In Peko-Wallsend, Mason J also said that to establish the ground of failing to take into account relevant considerations the applicant must show that the decision-maker was bound as a matter of law, to take a consideration into account. The answer to this question will depend upon the construction of the relevant statute which will govern matters which must be taken into account. 23 Where a written statement of reasons are given, the court will decide for itself whether a consideration has been taken into account notwithstanding an expressed reference to, or omission of, a consideration in a written statement of reasons. 24 Where the decision-maker has taken irrelevant considerations into account, or failed to take into account relevant considerations, the default must be measured in relation to the totality of the factors he has to consider. If the fact that is in question is only one of a number relied upon by him, then weight must continue to be given to the decision. The decision will only be overturned by a court where the court decides that the insufficiency of weight given to a certain consideration clearly amounts to a wrongful exercise of the relevant discretion: Lovell v Lovell (1950) 81 CLR 513 at 533.

The Schokker affidavit of 21 June 2010 25 The applicants assert that the Tribunal failed to take account of the affidavit of Bernard Schokker sworn 21 June 2010 (the Schokker affidavit). 26 In the Decision the Tribunal does not refer at all to this affidavit. It was filed in response to the affidavit of Sandro Gianni Mancini sworn on 31 May 2010 (Mancini Affidavit). Mr Mancini is an Audit Leader/Senior Auditor employed by the Commissioner in the Complex Audit area of the Compliance Section in the Goods and Services Tax Business line of the Australian Taxation Office. His affidavit including annexures comprises 161 pages. The applicants submit that the structure and text of the Reasons for Decision indicates the Tribunal did not take the Schokker Affidavit into account. They refer, in particular, to the following paragraphs in the Reasons for Decision: paragraphs 6 (lists only affidavits filed by the Commissioner); 9 (chronology does not mention the Schokker Affidavit, ending rather with the Mancini Affidavit); 25 (suggesting applicant's have failed to challenge specific points as to the elements of non-compliance and failed to attempt any point by point response but cf Schokker Affidavit); 37 (granted opportunity to provide affidavit evidence); 48; and 50-55. 27 This they say is the position despite: (a) the Tribunal referring to and relying on the Mancini Affidavit in concluding that there was 'continuing non-compliance with the Relevant Directions'; (b) the relevance of evidence challenging the specific allegations of non-compliance and in opposition to the application to dismiss, as referred to by the Tribunal itself; and (c) the Schokker Affidavit being before the Tribunal at the time of the hearing. 28 The Commissioner submits that these matters relied upon by the applicants do not support their contentions that "the structure and text of the Tribunal's decision" indicates that the Tribunal did not take the Schokker affidavit into account because: 1. para 6 of the Tribunal's Reasons for Decision is merely listing the sources of the relevant Chronology; 2. para 25 of the Tribunal's Reasons for Decision refers only to the applicants' submissions, not to the applicants' evidence. What it says about the applicants' submissions is entirely accurate; 3. para 37 of the Tribunal's Reasons for Decision is no more than a statement of the procedural fairness which had been afforded to the applicants by the Tribunal; 4. para 48 of the Tribunal's Reasons for Decision has nothing to do with the Schokker affidavit; 5. paras 50-55 of the Tribunal's Reasons for Decision do no more than indicate that the Tribunal accepted (as it was entitled to do so) Mr Mancini's evidence in concluding that what the applicants had filed did not comply with the Tribunal's directions. In addition to the affidavit evidence the Tribunal also had access to the filed document themselves in reaching that conclusion; 6. in particular, paras 53-55 discuss the applicants' failure to file a Master Index which complied with the Relevant Directions. The Schokker affidavit does not address the issues of non-compliance discussed in those paragraphs. 29 The absence of any reference to the Schokker affidavit in the Reasons for Decision in my view does not mean that the Tribunal did not take it into account. 30 The Commissioner makes the following submissions which I accept. The Tribunal was referred to the Schokker affidavit in both the oral and written submissions of the parties. For example, the Schokker affidavit was discussed in paras 70 and 71 of the Commissioner's written submissions dated 23 June 2010 and the Tribunal was referred to the Schokker affidavit by counsel in oral argument when numerous submissions were made in respect of the affidavit. At paras [21]-[27] of the Reasons for Decision the Tribunal summarises the contentions made by the applicants in opposition to dismissal by reference to the applicants' written submissions. In paras [22]-[25] of the Tribunal's Reasons specific reference is made to the assertions in the applicants' submissions before the Tribunal that the applicants had complied with the Relevant Directions. The applicants' submissions before the Tribunal (in para 3) refer to the Schokker affidavit as part of the basis to support their contention that they had complied with the Relevant Directions. 31 The Schokker affidavit is descriptive of the documents to which it refers. It is assertive to the extent that Mr Schokker states at [9] that "the applicants have filed the requested documents in accordance with the directions of the Tribunal." 32 There is no obligation on the Tribunal to mention or discuss in its Reasons for Decision every piece of evidence which is before it: Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630 at [46]. 33 The Tribunal, as author of the Relevant Directions, was well able to assert for itself whether these directions had been complied with by the applicants. It found that there had not been due compliance.

Prejudice to the applicants 34 The applicants now accept that the Tribunal took account of the effect of dismissal upon the applicants. It is contended however that the Tribunal should have taken account of an alleged concession "that certain documents were provided in compliance with the categories set out in the Relevant Directions which it is now claimed might have sustained the applications for review in part. 35 As the Commissioner points out no such contention that a part only of the applications for review might continue was ever made to the Tribunal by the applicants, in either their oral or written submissions. Nor, in my opinion, was there any evidence before the Tribunal which would have supported such a contention. In the circumstances it cannot be a relevant consideration which the Tribunal was required to take into account. Further, the Tribunal made a very clear finding at para [56] of its Reasons for Decision to the effect that the applicants' non-compliance would make a proper review at any substantive hearing extremely difficult or in some cases impossible. It would also have resulted in a radical extension of the length of any hearing. This indicates that the Tribunal had proper regard to that question. 36 The applicants' contention is that the Tribunal should have taken into account that the dismissal would result in "extreme prejudice" to the applicants. The extreme prejudice is said to relate to the outstanding liabilities of each applicant becoming final on a dismissal of the applications. The Tribunal considered this issue at para [39] of its Reasons where it noted that the power should be exercised sparingly. The most recent payments made in respect of the disputed amounts were made by LVR on 13 June 2008 and by CZ on 13 December 2008. The Commissioner's contention that the ongoing delays caused by the non-compliance of the applicants with the Tribunal's directions had prejudiced the revenue both by the non-payment and by reducing the likelihood of ultimately obtaining payment of the amounts outstanding was a relevant matter for the Tribunal to consider.

No reasonable person could have made the Decision 37 The applicants make the following submissions. The Schedule referred to is attached at the end of these Reasons. 9. The Applicants have prepared a Schedule listing the terms of the Relevant Directions; how the Second Respondent has alleged the Applicants have failed to comply with those directions and the Applicants response to such allegations (see Attachment 1 to these submissions). 10. The Relevant Directions are procedural only, and use the term 'must' where the Applicants had to file certain documents and the term 'should', in contradistinction, to express a likelihood or suggestion. It is apparent from the Schedule that a significant number of the Second Respondent's complaints go to the merits of the Applicants' objections, and hence are not a breach of the Relevant Directions. 11. Further, the Respondent concedes that certain documents were provided in compliance with the categories set out in the Relevant Directions. Yet the Tribunal decided not to allow even these elements of the Applications for Review to proceed to hearing. 12. The Tribunal found that the documents filed by the Applicants "do not comply with the Relevant Directions". It appears to have done so on the basis of the Mancini Affidavit responding "in detail"; setting out "numerous instances of non-compliance"; setting out the "basis for the respondent's contention that the applicants have not complied with the Relevant Directions" and the Second Respondent's evidence making "specific points" as to the "elements of…non-compliance with the Relevant Directions". 13. The Tribunal does not set out the "numerous instances" of alleged non-compliance. To the extent the Tribunal has taken into account the commentary of Mr Mancini on the contents of the documentary evidence (or at best, his understanding of the documents) it has relied on an irrelevant consideration. 14. As to the specific aspects which the Tribunal expressly refers to as demonstrating non-compliance , taken globally, no reasonable person could have drawn that conclusion in light of the terms of the Relevant Directions and the totality of evidence before the Tribunal, by reason of the following: 14.1 The Applicants' Master Index complies with order 4 of the Relevant Directions in that: 14.1.1 It lists the witness statements on which the Applicants intend to rely; 14.1.2 It states the applicant in respect of which it is filed and it states the name of each witness and the date of the statement; and 14.1.3 Each witness identifies the documents on which the witness will rely; 14.2 The Master Index does not have to list the documents on which a witness will rely in relation to each of the categories of documents listed in paragraph 2.b of the Relevant Directions, but merely the documents or groups of documents on which the witness will rely. Nor does a witness have to say to which paragraphs the documents relate. The statement of the Relevant Directions at paragraph 55.1 and 55.3 of the Decision demonstrate with respect a misunderstanding by the Tribunal of its own Relevant Directions ; 14.3 It is insufficient to refer to the allegation that the Master Index refers to annexures to witness statements which have been uplifted and not refiled without taking into account Mr Schokker's statement that these annexures are summaries of the documents now produced in full and no longer relied on in and of themselves; 14.4 It is incorrect to say that the Master Index does not identify the documents or groups of documents each witness will rely on, when the Tribunal acknowledges that Mr Schokker as a witness will rely on all the documents (and is the only witness to rely on any documents). This allegation would make more sense if several witnesses were to each rely on a subset of the documents, which is simply not the Applicants' case; 14.5 The Applicants prepared a list of documents, based on indices to the files of documents produced, in compliance with order 2.a. of the Relevant Directions and it is incorrect to say that there is no list of documents. The Second Respondent refers to a list for CZ Holdings and annexes a list for LVR; 14.6 If the purpose of requiring the documents to be numbered in order 2.a.i. of the Relevant Directions is for ease of identification, then this has been achieved by the file numbering and pagination within each file, as explained by Mr Schokker. Mr Mancini himself identifies certain documents by using this numbering system. 14.7 The Relevant Directions do not require the documents to be filed in the categories listed in the Relevant Directions, contrary to paragraph 51.4 of the Decision. The Relevant Directions do suggest the listing be arranged in groups and sub-groups; 14.8 The Relevant Directions do not require the documents to exclude duplicated and irrelevant material, contrary to paragraph 51.5 of the Decision. Instead, the documents must be those the Applicants propose to adduce into evidence; 14.9 It is insufficient to allege that not all documents are paginated, without providing examples and taking into account the extent of the pagination; 14.10 It is insufficient to allege the documents are not consistently in chronological order, when the Relevant Directions only suggest the list should be (paragraph 2.a.ii), especially without taking into account the evidence of Mr Schokker; 14.11 The statement that the documents are not arranged in the groups described in Mr Schokkers' 3 May witness statement is irrelevant to the Relevant Directions and is not expressly supported by the reference given. Further, the further evidence of Mr Schokker should have been taken into account. 38 For the purposes of this ground in s 5(2)(g) of the ADJR Act it must be shown that having regard to the reasoning process leading to it, it was a decision to which no reasonable decision-maker could have come: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1KB 223 at 230; Federal Commissioner of Taxation v McCabe (1990) 26 FCR 431 at 438. What is required is manifest unreasonableness: Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379. 39 It is important to bear in mind the limited scope and nature of review of decisions based on unreasonableness. The ground is "extremely confined" Attorney-General (NSW) v Quin at 36. A review of a decision on the ground of unreasonableness cannot become "merits review in drag": Powerco Limited v Commerce Commission [2006] NZHC 662 at [24]. It does not, under another guise, allow the review of a decision on grounds of substantive unfairness: Attorney-General (NSW) v Quin at 37. It is not sufficient to show that a different conclusion or course of action could reasonably have been arrived at or taken: Friends of Hinchinbrook Society Inc v Minister for Environment (No 2) (1997) 69 FCR 28 at 59-65. It should also be borne in mind that fact-finding cannot be challenged on the basis of Wednesbury unreasonableness; only decision makers' discretionary decisions are amenable to review on this ground; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 [73] and [143]. It is clear then that courts are reluctant to interfere with factual findings on the unreasonableness ground alone. 40 In general it is not for a court to conduct a merits review and determine whether a decision-maker's decision was right or wrong in a substantive sense. It is not for a court to substitute its own decision to that of the decision-maker. The question for the court is whether or not any of the grounds of review are made out as a matter of law. 41 Ordinarily a finding of fact is not susceptible to review independently of the ultimate decision. The High Court in Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11 indicated that although the position at common law was "by no means decisive of the interpretation of the grounds of review in the ADJR Act" given particularly the scope of review contained in that Act, it was of the view that, in general, "error of law" in s 5(1)(f) was "intended to reflect the contents of that expression as it was understood at common law in this country before 1977" at [39]. 42 The courts should not delve into the merits of administrative decisions and the weighing of evidence is a matter for decision-makers, not for courts exercising supervisory jurisdiction; Minister for Immigration and Citizenship v SZJSS. 43 Where a decision is challenged upon the basis that it was manifestly unreasonable (in the Wednesbury sense), the test to be applied is stringent. The decision must amount to an abuse of power or be so devoid of plausible justification that no reasonable person could have taken that course: Attorney-General (NSW) v Quin at 36-37; Weal v Bathurst City Council (2000) 111 LGERA 181 at 188; Wyong Shire Council v MCC Energy Pty Ltd (2005) 139 LGERA 296 at 312. 44 In the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power: Minister for Aboriginal Affairs v Peko-Wallsend Limited at 41. 45 The Commissioner submits and I accept that the applicants' submissions under this ground are, in effect, an invitation to the Court to conduct a merits review of the decision, to weigh the available evidence and determine whether the decision was the right or wrong one. This is not permissible in judicial review. 46 The Schedule which is attached to the applicants' submissions goes largely to the merits of the Tribunal's finding of non-compliance. By their reliance on the Schedule together with the associated submissions, the applicants are asking the Court to review whether, and to what extent, as a matter of fact, there had been compliance with the Tribunal's directions. This is outside the scope of judicial review or any submission that the decision was a decision no reasonable decision maker could have reached. 47 Further, the applicants' submissions at para 14 of their Outline of Submissions appear to be primarily based on the contention that the Tribunal did not understand the meaning and intent of its own directions. I agree with the Commissioner's submission that there is no basis for any such contention. 48 As the chronology set out in para [9.1]-[9.40] of the Reasons discloses, by the time of the Tribunal's dismissal hearing on 24 June 2010 a period of more than 2 years had elapsed since the first making of a direction for the applicants to file their evidence. During this time the applicants had made several previous unsatisfactory attempts to file their evidence and there had been one previous dismissal hearing to consider the applicants' failure to comply with an earlier direction for the filing of their evidence. The Relevant Directions, which are very detailed, were the culmination of the Tribunal's attempts to ensure that the evidence was filed in a proper form. 49 I reject the submission that the Senior Member, who had been dealing with the matter throughout that time, did not understand the requirements of the Relevant Directions he had made in August 2009 in order to try to resolve this very unsatisfactory situation or that he misapplied the effect of those directions in his Reasons for Decision. Further, at no point did the applicants make any submission at the dismissal hearing to the effect that the Relevant Directions bore the meaning which it is now contended they have, nor that the requirements of those directions were more limited than those which the Commissioner's evidence and submissions addressed. 50 Further, it is not an indication of the required unreasonableness that the Tribunal's Reasons for Decision did not exhaustively list all the instances of non-compliance with the Relevant Directions as the applicants' submissions appear to suggest. The Tribunal was entitled to accept the evidence of Mr Mancini as to the results of his detailed consideration of the documents which had been filed (which it is noted numbered in excess of 23,000 pages). 51 The Tribunal in its Reasons for Decision found at [41]-[55] that the applicants had not complied with the Relevant Directions within a reasonable time and provided its supporting reasons. In so doing it is apparent that the Tribunal had regard to the totality of the evidence before it. There is no basis for the applicants' contention that in having regard to Mr Mancini's evidence the Tribunal "relied on an irrelevant consideration" of the issues raised by the dismissal hearing. The analysis in the Mancini affidavit of the extensive documentation which had been filed as the extent to which it complied with the Relevant Directions was clearly relevant and the Tribunal was entitled to have regard to it. Likewise the Tribunal was entitled to have regard to the evidence of Ms Coates who is a principal litigator employed by the Commissioner in the Legal Service Branch of the Law and Practice business line of the Australian Taxation Office. No objection was made by the applicants to the Tribunal's consideration of the evidence of Mr Mancini and Ms Coates. Further, if it were the case, as the applicants now contend, that Mr Mancini's commentary on the documentary evidence and/or his understanding of the documents was irrelevant (which the Commissioner denies), it would then, as the Commissioner submits, equally be the case that the affidavits of Mr Schokker and his commentary upon and understanding of the documents would also not be relevant. This is contrary to the applicants' submissions that the Schokker affidavit (which was essentially responsive to the Mancini affidavit) was a relevant consideration of which the Tribunal failed to take account. 52 The applicants' Master Index contained significant defaults and omissions from the terms required in the Relevant Directions. The intent of those directions was that the particular documents, or groups of documents, referred to in para 2 of the Relevant Directions under various headings and sub-headings were to be identified by reference to those headings and sub-headings in the Master Index. This was not done. The very purpose of the Relevant Directions was to compel the applicants to identify with particularity which documents each witness would seek to rely upon in evidence in relation to the particular categories listed in sub-paras 2(b)-2(n) of the Relevant Directions. These categories relate to the specific claims made in the applicants' objections and therefore the matters in issue in the proceedings. The Relevant Directions contain cross references in relation to each category back to the relevant category of the applicants' amended objections. An example of this is found at para 2(b) and (c) on page 2 of the Relevant Directions. To say that "Mr Schokker as a witness will rely on all the documents" is to avoid entirely any attempt to comply with the Relevant Directions and it is for this reason that the Tribunal found correctly that "the (Commissioner) and the Tribunal are in no better position than the first time the documents were filed to know which documents will be relied upon by each witness in each witness statement in relation to each issue" (Reasons at [54]). 53 The Mancini affidavit describes in great detail and with specificity the many respects in which there has been a failure on the part of the applicants to comply with the Relevant Directions. It was open to the Tribunal to prefer, as it did, this evidence to that of Mr Schokker which, as I said was on the question of compliance was assertive in nature. 54 For all these reasons the application should be dismissed. The applicants should pay the Commissioner's costs to be taxed if not agreed. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.

Associate: Dated: 6 October 2011 Attachment 1 Schedule of Allegations of Non-Compliance with Relevant Directions and Responses Para No Direction made 26 August 2009 (Text) Affidavit of Coates sworn 12 April 2010 Affidavit - Comments on Documents filed and served 231209 and 210109 Respondent's Letter of 10 Feb 2010 (Annexure 7 to Affidavit) with alleged non-compliance with directions Witness Statement of H Schokker signed 3 May 2010 (verified by Affidavit of HB Schokker sworn 13 May 2010) Affidavit of SG Mancini sworn 31 May 2010 Affidavit of HB Schokker sworn 21 June 2010 1 To uplift from Tribunal and the Respondent all documents previously filed and served, including folders of documents annexed to witness statements 19(c) Asserts no advice whether all or some of the documents and witness statements previously filed with the Tribunal had been uplifted from the Tribunal [Not a breach of direction] Acknowledges uplift of all documents served on the Respondent, including all annexures to witness statements, but not including the witness statements 2 Must each file and serve a copy of every document the applicants propose to adduce in evidence at the hearing, to establish that the assessments of income tax, GST and penalty are excessive, in the manner and form specified below 15-17; Annexure 6 (now at pages 155-171) Acknowledges filed and served - LVR: files numbered 1-60 (excluding 27, 28 and 30-32); CZ: files numbered 1-28 (excluding 16 and 18-21), and a 'Document List'. Total: 88 files [Incorrect - 77] States all the documents to be relied upon by the applicants [in effect, produced] 23 Dec 09 and 21 Jan 10 and they are the only set of documents to be relied on by the applicants (para 12) 2.a A list of documents should be prepared in which: 2.a.i documents should be numbered and specifically described or arranged in groups and sub-groups with a number and description for each group and sub-group 19(d) Asserts the documents were not numbered and the documents were not arranged in groups in accordance with the directions [but cf Annexure 6, in which documents shown as grouped and numbered] Asserts documents have not been numbered and specifically described; nor have they been arranged in groups and subgroups with a number and description for each group and sub-group. There has been some attempt to group the documents in most files, but we note that not all are properly grouped States that the documents [provided] have been identified in the list of documents annexed to his Witness Statements of 23.12.09 (LVR) and 21.01.10 (CZ) and have been numbered. Further, the list identifies the specific page numbers where these documents can be found in the group of files annexed to the Statements (para 4.2) Asserts that the only document which bears any relation to a "list of documents" is provided only for CZ and that merely accumulates all the indexes at the front of each file into a single document. Asserts that this does not comply in any way with the direction of the Tribunal. Asserts further, there is no such list for LVR (para 12) [but see Annexure 1 which is a list of all the LVR documents compiled from the indexes to the LVR files] States a list of documents was prepared for LVR. It is a summary of the indexes on the front of each file (as Mancini states) and the information is therefore before the Respondent (para 7 and annexure HBS1) Asserts that, very confusingly, groups and sub-groups do not correspond with the groups and sub-groups of claims made in the amended objections [Not a breach of the directions] States that the documents have been provided in groups and each group is identified as outlined in paragraph 4 of the Statements (para 4.3) Asserts the Tribunal required that the list of documents grouped the numbered documents by relevant subject matter. Asserts further in my view the Applicants have not satisfied this Direction of the Tribunal as they have not provided a list of documents and have not numbered the documents [in reference to the Master List] (para 15) Asserts although each file has a label, not all of the files' contents correspond with the label [Commentary on content and Not a breach of the directions] Asserts I am aware from my review of the documents that none of the documents filed have been given document numbers although the files of documents are numbered and most of the documents within each file are paginated (para 17) States the documents have been numbered appropriately (para 12). Further, that the numbering that I adopted represents a combination of the file number and the page number (para 13) Asserts documents in some of the files are irrelevant or duplications (examples given) [Commentary on content and Not a breach of the directions] States his belief that all documents are relevant and the duplication of documents is necessary to completely understand the true taxation position of the Applicants (para 4.4) Asserts I also provide some further examples of irrelevant information contained in the files at para 23 and documents that are misleading as to the true tax position of the Applicant including those at para 33 and 34 (para 29) [Commentary on content and Not a breach of the directions] Repeats para 4.2 and 4.3 of witness statement (para 18) 2.a.ii each document in a group or sub-group of documents should be arranged in chronological order and paginated Asserts only some of the documents have been arranged in chronological order, although the documents have been paginated States the documents are in chronological order and when dealing with the purchase and sale of lots within a parent lot, those documents are in chronological order within the specific lot, which are also in order. When providing the list of documents the Applicants have listed the documents in lot number order in order to make it easier for the Tribunal and Respondent to understand the documents used in the calculation of the Applicants' taxation position (para 4.5) Asserts the documents are not in chronological order and refers to File 10 for CZ as an example. The index lists over 50 documents which are briefly described but not numbered. The fourth column of the index is headed 'date' and gives the date for most but not all of the documents. The dates of the documents show that they are not in chronological order (para 30 and Annexure 4 now at page 463) States this file does support the correspondence file for the loan that CZ held with the Bendigo Bank. The order of the file has not been manipulated by me. For completeness to satisfy the directions of the Tribunal to furnish all documents in support of the applicants' contentions, the contents of the file were numbered and listed accordingly. The index assists in the location of any document in the file. For example, documents 10 064-70 are invoices, as is document 10 099 (para 19). States the relevance of these files serves to oppose any suggestion that CZ did not have an interest expense as reported (para 20) Asserts I have found that not all of the sales and purchase contracts are held in one file (para 32) States the list of documents contained in the front of files numbered 38-46 have a column that identifies which 'parent lot' the document refers to [examples given] (para 21) States I do not know which list referred to as there is no reference or indication provided of either the location or the name of the list (para 33) [but cf Annexure 1 which clearly shows lot numbers and para 34] States the document list is contained in the front of each file. It clearly shows each and every lot which has been sold and is in lot number order. Files 1-10 contain the contracts of sale for the lots and files numbered 11-20 contain the relevant settlement documents (para 22) Asserts the references in the files to sales and purchases of properties within a parent lot are not in chronological order (para 34) States to place all the contracts of sale documents and settlement documents in chronological order is impracticable. I hold the genuine belief that to audit the proceeds from each lot sold by the applicants, the grouping of the documents in lot number order provides the most efficient way (para 23) Asserts some of the information in the files 1 to 10 and 11 to 20 is incomplete as there are contracts and statements which are missing from the files (para 34) [Commentary on content and Not a breach of the directions] There are a small number of contracts of sale which are not in the possession of the applicants. These are identifiable by examining the list of documents at files numbered 1-10 and observing that there is no page reference for the sale of the relevant lot. There are contracts for sale for 42 lots missing (para 24) Assets files 38-46 and 47-49 contain a range of material some of which is relevant to the sale and purchase of properties and some is not [Commentary on content and Not a breach of the directions]. Asserts the files are not arranged completely in either chronological order or in lot order (para 35) Repeats paragraphs 21 and 22 above Asserts the documents in file 41 are meaningless and irrelevant to a review of the objections decisions (para 36-37) [Commentary on content and Not a breach of the directions] States the disused Attache accounts represented by the documents contained in files numbered 41, 50 and 51 may not assist the Tribunal in arriving at its decision. They assist to the extent of the expenses paid from the LVR accounts which had been recorded in the system where the cheque books were unable to be located. The documents provided me with a source of record as to the cheque payment details in order for me to complete the income tax and goods and services tax calculations (para 26) Asserts File 42 contains documents which are either not relevant to the issues in the objections or are misleading [examples given] (para 38-39) [Commentary on content and Not a breach of the directions] States File 42 is a source file that contains the purchase contracts for some of the 'parent lots', feasibility studies for the development and a proposal for a joint venture (which was not entered into). For the sake of completeness and to ensure that the applicants can discharge their burden of proof, the complete records and documents which are currently available to the applicants have been produced (para 27-28). Further the 4 lots referred to at para 39(d) in Mancini Affidavit were not owned by LVR (para 29) 2.a.iii page number references should be given for each document and a range of page numbers for each group and sub-group Asserts page number references have not been given for each document and a range of page numbers has not been given for each group and sub-group States pages numbers have been provided for the documents within groups, but no page numbers have been provided for the entire groups as the specific groups of documents are separated into files as identified in paragraph 2 (sic - 4) of the Statements (para 4.6) Asserts not all the documents in the files have been paginated (para 40) The CZ File 24 contains the goods and services tax invoices for the 2002 & 2003 financial years. The file contains a list/summary that was numbered but not indexed as it is not an invoice (and just a list/summary). The invoices included in that file have been paginated and indexed separately (para 30) I have also observed that the index to each file is not necessarily arranged in the same order as the documents in the file and 6 pages are not included [example CZ File 24] (para 40 and Annexure 10) [Commentary on content and Not a breach of the directions] States that given the entitlements to GST credits derived from the invoices in this file are relevant to CZ's application, the index was sorted into the relevant financial quarters to allow for the input tax credits to be calculated easily. The index is accurate and the organisation of the invoices by date is supported by the references to each invoice included in this file (para 31) Asserts the groups listed at para 4 of the witness statements do not appear to be linked to the spine descriptions on the files or the indexes inside each file or anywhere else in the files (para 41) States the spine descriptions have not been manipulated by me. To maintain the integrity of the files, I did not rename the files or alter them in any way. I simply used the files and their contents to arrive at my calculations of the income tax and goods and services tax liabilities. I also numbered the files consistent with the list of documents (para 32) 2.a.iv the groups should include the categories below Asserts the groups were required to include the categories listed below State the Statements specifically deal with each item within the categories listed and the Statements provide my workings, and reasons for workings, in support of the tax payable (para 4.7) Asserts the very large number of documents provided are not arranged in the particular groups required by the Tribunal (para 20). [Not a breach of the directions] Asserts there is no further reference in the Master Index or the witness statement that will assist the Tribunal in determining the relevance of any of these files of documents to the particular subject groups listed in the Tribunal's directions (para 21). [Not a breach of the directions] Asserts the presentation makes it very difficult to identify which relevant and necessary documents are not provided (para 22). [Not a breach of the directions] Asserts the witness statements do not provide calculations of the tax payable however various conflicting calculations of the tax payable are in the files. The tax payable is not set out in the witness statements (para 42). [Commentary on content and Not a breach of the directions] States the tax payable is able to be calculated from the working paper files at LVR File 29 and CZ File 17, and any earlier calculations included in earlier affidavits are not relied upon by the applicants (para 33-34) 2.b. GST: Net Amounts in BAS - the applicant's calculations of each item in each relevant BAS Acknowledges net amounts have been provided in respect of BAS. Asserts the amounts do not match the amounts claimed in the amended objections [examples given are higher]. [Commentary on content and Not a breach of the directions] Agrees the taxation position calculated and summarised in the Statements are different to those in the Applicants' amended objections. States advised by solicitors that leave will be sought to amend the objections in order to clarify the actual taxation position of the Applicants (para 4.8) Asserts I have found multiple and conflicting calculations of what the Applicants say is the correct tax payable in the documents of each Applicant [example given] (para 44). [Commentary on content and Not a breach of the directions] States the objection contained a minor arithmetical error and leave will be sought to amend the objection at the hearing (para 35). Further, the expenses of the applicants have been categorised and are supported by the documents [example given] (para 36) Asserts in some cases net amounts provided in the documents do not match the corresponding amount in either the associated summary document filed at the same time [no examples given] or the amended objection [see examples referred to above] [Commentary on content and Not a breach of the directions] 2.c. GST: Input tax credits 2.c.i. A list of the input tax credits claimed on acquisitions in the course of developing and subdividing the land. Supporting documents include a copy of the tax invoice and relevant bank statement showing the date of payment of each invoice (or other proof of payment) Acknowledges a list and some bank statements have been provided. Asserts there is no cross-referencing from the ITC claimed to the relevant payments showing the date of payment of each invoice (or other proof of payment). [Commentary on content and Not a breach of the directions]. States the bank statement particulars are summarised in the cash books provided, which demonstrate the payment of the invoices. The cash books rely on the particulars of the bank statements and reflects what is contained in the bank statements (para 4.9) Asserts from his experience as an accountant and taxation auditor what term 'cash books' means and says the cash books referred to by Mr Schokker seem to be merely a transposition of the debit and credit transactions appearing on an unidentified bank statement. Asserts further the cash book does not cross reference the payment back to an invoice (or a bank statement) nor does it cross reference it back to a particular development nor does it provide an adequate description of the payment nor does it adequately identify the bank accounts to which the funds are being deposited and drawn from [examples given] (para 45-53 and 55). [Commentary on content and Not a breach of the directions] States I have not cross-referenced the input tax credits to the payments of the respective applicant as the payments were made from multiple bank accounts. The tax invoices contain the necessary information for the claiming of an input tax credit. The payment of the expense does not assist the claiming of an input tax credit (para 37). The cash book lists the payments made and allocates them into the necessary categories (para 46) and reflects the expenses in the bank statements (para 39). Mancini evidences that he can follow the records presented (para 40). A payment was made for legal expenses in relating to development issues. The amount has accordingly been included as an expense in the profit and loss statement but has not been claimed as an input tax credit as I was unable to locate the relevant tax invoice (para 41). The Suncorp listing in the cash book lists the relevant Suncorp account numbers on the left. The numbers indicate which Suncorp account the entry originates from (para 43) Asserts I continue to take the view that the documents listed in a letter from the Respondent dated 30 Jan 08, including invoices to support input tax credits and bank statements evidencing payment of the invoices, are necessary for a proper review of the Applicant's objections (para 54). [Commentary on content and Not a breach of the directions] Asserts the cash books do not show what expenses Mammoth incurred on behalf of each Applicant nor how any expenses incurred by Mammoth have been accounted for by the Applicants. Nor does it identify the lots from which the sale proceeds were used to renumerate Mammoth (para 55). [Commentary on content and Not a breach of the directions] Repeats para 37 above (para 44) Asserts further, the list does not align with the amounts claimed in the amended objections [of examples given, all but 2 higher] [Commentary on content and Not a breach of the directions] 2.c.ii. Development expenses Mammoth - A list of the input tax credits claimed on acquisitions from Mammoth Investments P/L in the course of developing and subdividing the land including a detailed breakdown of the supplies provided. Supporting documents to include Acknowledges a list has been provided by LVR. Acknowledges a list of all expenses has been provided by CZ but asserts it does not separately list those in relation to Mammoth Investments P/L Confirms that a list of the input tax credits claimed by CZ was provided and states I have identified the expenses of Mammoth Investments P/L in the Statements at para 9-13 (para 4.10) Acknowledges the list for LVR satisfies our request to the extent that it identifies the input tax credits claimed in respect of the Mammoth invoices. Notes the list of the input tax credits claimed by CZ [as identified by the Respondent] does identify some or all of those claimed in respect of Mammoth but does not provide them in a separate list. Asserts a separate list for CZ which identifies which of the expenses were incurred by Mammoth would assist the Respondent to review claims in the objections of CZ which relate to development expenses (para 56). [Commentary on content and Not a breach of the directions] States the input tax credits claimed by CZ are listed in the documents numbered 17 023 - 024 (para 45) 1. the tax invoices for each service provided Acknowledges a proportion of tax invoices for services has been provided. Asserts other documents included are estimates, quotes and progress claims which are not in fact tax invoices [Commentary on content and Not a breach of the directions] States the estimates, quotes and progress claims are provided in support of the tax invoices and a quote has been identified as a quote. I have not included such details in the calculations of the taxation position (para 4.11) Asserts listed at Annexure 19 detailed references to documents in files 47 and 54-57 which were put forward in the files as claims for input tax credits but which I found on review are only interim invoices, progress certificates, claim forms, claim payments or a job costing. None of these documents are tax invoices. The amounts referrable to those documents total $12,959,146.28 (para 57-58). [Commentary on content and Not a breach of the directions] States the full list of input credits claimed by LVR is contained in File 29 (para 46-47) 2. the relevant bank statement (or other proof of payment of each invoice) Acknowledges some bank statements are provided. Asserts there is no cross-referencing between the bank statements and the tax invoices to demonstrate payment of the invoices and further, it is not possible to ascertain whether the amount of each invoice has been paid and reconciliation of the invoices and bank statements is not possible [Commentary on content and Not a breach of the directions] States invoices and the bank statements in support of the invoices have been provided. States the bank statement are summarised in the cash books provided, which demonstrate when the invoices were paid. The cash books rely on the particulars of the bank statements and reflect what is contained in the bank statements (para 4.12) 3. the original tender document submitted by Mammoth as head contractor for the development projects Asserts the original tender documents submitted by Mammoth as head contractor for the development projects have not been supplied and then says some tender documents have been found in the documents filed for CZ States the parties do not dispute the developments were undertaken, and so the Statements do not identify any tender documents (para 4.13) Asserts the tender documents are necessary to the review of the issues in the Applicants' objections so that the Respondent can ascertain the costs attributable to the development and who undertook the development work on the parent lots (para 60). [Commentary on content and Not a breach of the directions] States all documents which are in the possession of the applicants have been produced in the files (para 48) 4. 3rd party certifications/authorisations for progress payments to Mammoth or Mammoth Nominees P/L Acknowledges some 3rd party certifications/ authorisations for progress payments to Mammoth Investments or Mammoth Nominees are provided. Asserts it is not a complete set [Commentary on content and Not a breach of the directions] 5. Any other relevant documentation As above. Asserts other documents included are estimates, quotes and progress claims which are not in fact tax invoices [Commentary on content and Not a breach of the directions] 2.d. GST: Land purchases - supporting documents include copies of the relevant contracts of sale, settlement statements, elections to use the margin scheme or other supporting information demonstrating an intention to use the margin scheme Acknowledges supporting documents provided include copies of the relevant contracts of sale, settlement statements, but asserts no elections to use the margin scheme [Commentary on content and Not a breach of the directions] 2.e. GST: Loans for each purchase - supporting documents include copies of the loan agreements, copies of loan statements showing the amounts of interest paid Acknowledges supporting documents provided for LVR include copies of the loan agreements, copies of loan statements. Asserts only some of these documents have been provided for CZ and these are not grouped together [Commentary on content and Not a breach of the directions] States the loan agreements in relation to CZ are those in the possession of the Applicants. Should there be loan agreements that are not included, the Applicants do not have possession of these documents anymore. The loan statements support the financial particulars between the borrower and lender. Furthermore, all the loan documents which are in the Applicants' possession are grouped into 3 groups, being those from 3 different providers of the loans (para 4.14) Asserts CZ Files 11-13 and 27 contain a range of documents unrelated to loans obtained by CZ and in fact at pages 137-138 of CZ File 12 is an employment resume of Josephine Bazzo, and only one loan application for the Applicant was found (para 61). Asserts 'balance sheet calculations' are merely transpositions of figures (para 62) and some bank statements were not found (para 63) [Commentary on content and Not a breach of the directions] Repeats para 32 above (para 49). States the cash books for each account are identified and listed in File 17 and include the interest incurred and paid for each loan account. These are the figures transposed onto the document I refer to as the balance sheet calculation which Mancini is referring to (para 50). States the bank statements are in File 13 (as per the index) and the loan details relating to Di Florio are in documents 23 027-028 and 10 189-238 (para 52). The bank statements for the GE loan are documents 11 200-207 (para 53) 2.f. GST: "Shortfall amounts" to settle the purchases of land - supporting documents include a list identifying the amount of each shortfall payment, to whom it was paid and what the payment was for, as well as copies of bank statements showing the payment of the shortfall amounts Acknowledges supporting documents for CZ include a list identifying the amount of each shortfall payment and to whom it was paid. Asserts other supporting documents, such as evidence of payment, have not been provided [Commentary on content and Not a breach of the directions]. Asserts supporting documents for LVR do not include a list identifying the amount of each shortfall payment and to whom it was paid States that both Applicants have provided calculations of the shortfall amounts. The shortfall was paid by Mammoth to the Applicants. No such list was ever provided to the Respondent listing when the shortfall was paid and to whom it was paid, as it was always paid by Mammoth to the Applicants (para 4.15) Asserts I have not located in the documents any evidence of the calculation or payment by Mammoth of the shortfall amounts and I do not find Mr Schokker's statement of any assistance in my review of the issues (para 64) [Commentary on content and Not a breach of the directions] States Mammoth undertook the development and any shortfall or payments for land purchased by LVR and CZ was funded by Mammoth. The calculations are shown on the balance sheet calculation sheet at documents 17 014-017 (para 54) 2.g. GST: Land Sales - a list of sales of land, including name of purchaser, date property sold, amount sold for, contracts of sale, whether margin scheme applied, calculation of GST liability" Acknowledges a list of sales of land including date property sold, amount sold for, contracts of sale, whether margin scheme applied, calculation of GST liability have been provided for both CZ and LVR [So not a breach of the directions] 2.h. GST: Proceeds from land sales - supporting information in respect of each sale includes settlement statements, relevant bank statements identifying receipt of settlement proceeds and relevant bank statements identifying date and amount of repayment of relevant loan Acknowledges supporting information in respect of each sale have been provided [So not a breach of the directions] 2.i. GST: Each applicant's indebtedness to Mammoth Investment P/L - table demonstrating the calculation of the debt and the date and amount of the reduction of the debt by the application of the proceeds of land sales, relevant bank statements of the applicants and Mammoth Investments P/L [and Mammoth Nominees P/L] showing payments of amounts owing or transfer of net balances, copies of relevant pages of accounting ledgers of the applicants, Mammoth Investments P/L and Mammoth Nominees P/L demonstrating the indebtedness Asserts the only accounting records provided from Mammoth Investments P/L to support the indebtedness of LVR is a bulk listing of transactions in file 41. Asserts further the listing does not assist as it does not allow analysis of whether the transactions relate to relevant developments and says no other supporting documentation is available. [Commentary on content and Not a breach of the directions] States the evidence relied upon by the Applicants is outlined in the Statements at paras 21-26 for CZ and 23-28 for LVR. States the Mammoth Investments Attache accounting records provided to the Respondent at file 41 are the only records available to the Applicants from the previous accounting records of Mammoth at this time, as outlined in the Statements. Cross referencing can still be done, but this document cannot be used on its own. For example, when considering a bank statement, it can be cross referenced to the Mammoth records, but not the other way around (para 4.16-4.17) Asserts I have concluded that the accounting records provided in File 41 are of no assistance in the review of the relevant issues as they do not allow analysis of whether any, and if any, which of the transactions listed relate to the relevant developments of each Applicant (para 65) [Commentary on content and Not a breach of the directions] States File 41 evidences that some of the CZ and LVR invoices were paid by Mammoth (para 56) 2.j. Income Tax: "Income" for each year of income - supporting documents include each applicant's calculation of the income, any additional bank statements or other documents verifying the receipt of income if not provided above Acknowledges supporting documents provided include each Applicant's calculation of the income. Asserts the amounts do not align with the amended objections and there is no cross reference to bank statements showing income received. [Commentary on content and Not a breach of the directions] States the Applicants will seek leave to amend their objections, as advised by solicitors. Further, the bank statements are summarised in the cash books which were provided, which demonstrate when the relevant amounts were received (para 4.18-4.19) Asserts the cash books merely reproduce the debits and credits from the bank statements. I have attempted to conduct (on a sample basis) an exercise of tracing the proceeds from the sale of properties by the Applicants back to bank statements using the 'cash books'. I formed the opinion there is insufficient detail provided in the cash books to trace sale proceeds back to the bank account. This is especially relevant where sale proceeds are used to pay third party supplies so that the full amount from settlement is not banked (para 66) [Commentary on content and Not a breach of the directions] States I am able to trace the sale proceeds from each lot sold to the relevant bank account using the list of lot sales and the cash books (para 56) 2.k. Income Tax: "Cost of goods sold" for each year of income - supporting documents include each applicant's calculations of the cost and identification of the goods sold in each year Acknowledges supporting documents provided for LVR include calculations of the cost and identification of the goods sold in each year. Asserts only incomplete calculations are available for CZ. [Commentary on content and Not a breach of the directions] States that the Respondent is incorrect in stating that "Only incomplete calculations are provided for CZ". The calculations in the summaries and profit and loss statements annexed to the Statements are complete (para 4.20) Asserts [by reference to the content of the witness statement and documents] failed to provide evidence or calculations as to the [illegible] figures used in the Profit and Loss Statement (para 67) [Commentary on content and Not a breach of the directions] States the calculation of the costs of goods sold is the cost of the 'parent lot' divided by the number of lots developed and allocating that portion of the cost sold and unsold lots at the end of the financial period (para 57). The cost of the land is reflected on the balance sheet calculation sheet at document 17 014-017 (para 58). The number of lots sold is shown on the list of lot sales in File 17 enabling the calculation as reflected at 17 018 to be made (para 59) 2.l. Income Tax: "Development expenses" for each year of income - supporting documents include each applicant's calculation of the development expenses, any additional invoices and relevant pages of bank statements showing payment if not provided above Asserts no supporting documents are provided States the development expenses are supported by the invoices, cash books and profit and loss statements, as stated and outlined in the Statements at para 29 for CZ and 31 for LVR. These have all been provided as they are annexed to the Statements (para 4.21) Asserts spent considerable time attempting to reconcile the development expenses claimed to the documents provided, but due to the manner in which the records have been maintained and presented to the Tribunal am not able to ascertain the Applicant's income tax liabilities. My view of the recordkeeping standards is that they do not satisfy s.262A(3)(b) ITAA 1936 (para 68) [Legal conclusion, Commentary on content and Not a breach of the directions] States not all the records of LVR and CZ are available. The only manner in which to calculate the profit and loss is the one adopted (para 60). The development expenses claimed comes from the list of invoices; the expenses paid by Mammoth and the development expenses from each account as listed in the cash books (para 61) 2.m. Income Tax: "Interest and fees" for each year of income - supporting documents include each applicant's calculation of the amount claimed, any additional statements or invoices and relevant pages of bank statements showing payment if not provided above Asserts a spreadsheet has been provided which is not cross referenced to any supporting documents. [Commentary on content and Not a breach of the directions] States the interest and fees spreadsheet annexed to the Statements were created from the bank statements and reproduced in the cash books. These have been annexed to the Statements (para 4.22) Asserts 'cash books' are merely spreadsheets used to record and categorise deposits, withdrawals and debit charges for each loan account. Mr Schokker says that the amounts he refers to were taken from cash books however the cash book for lenders Shelley and Blaxill is missing (para 69-70) [Commentary on content and Not a breach of the directions] States the loan details for the Shelly and Blaxill loans including the interest incurred and paid are reflected at document 57 038 (para 62) Asserts Applicants have not provided evidence to substantiate the interest and fees claimed by them (para 71-73) [Commentary on content and Not a breach of the directions] States the interest charged by Mammoth is reflected in the documents (para 63) 2.n. Income Tax: "Development expenses Mammoth" for each year of income - supporting documents include each applicant's calculation of the development expenses, any additional invoices and relevant pages of bank statements showing payment if not provided above Asserts no supporting documents are provided but then refers to "cash books" provided. Asserts "cash books" provided are just summary spreadsheets of bank statements - there are no cross references to any bank statements and no reference to what any payment is for. [Commentary on content and Not a breach of the directions] States the supporting documents are outlined and annexed to the Statements and are explained in the last paragraph of the Statements. Further, these documents are the same as those described in para 4.10 (para 4.23) Asserts that due to the state in which the records have been maintained and presented to the Tribunal, it does not allow me to readily ascertain the Applicants tax liability (para 74) [Commentary on content and Not a breach of the directions] Repeats para 60-61 above (para 64) 3. Must file and serve any additional witness statements they intend to rely on at the hearing 15-16 LVR: H Schokker WS; CZ: H Schokker WS; Acknowledged a further witness statement of H Schokker in each matter was served with the documents [So not a breach of the directions] 4. Must file and serve a master index listing all the witness statements they intend to rely on at the hearing including the following: 18, 19(a) Asserts there was no 'master index' which identified which witness statements would be relied on at the hearing; Asserts no master index provided listing all the witness statements applicants intend to rely on at the hearing. Annexure HBS2 is a copy of the Applicants' "Master Index" (para 3) [filed on 3 May 2010] [to be found pages 334-335, 356-357and 358-359, Affidavit of HB Schokker sworn 15 April 2011] The 'Master Index' lists the affidavits and annexures to be relied on by the applicants in these proceedings (para 5) 4.a. in respect of each witness statement the name of the applicant in respect of which the statement is filed, the name of the witness and the date of the statement; See Annexure HBS2 4.b. each witness must identify from the list of documents referred to at paragraph 2 above the particular documents or groups of documents the witness will rely on by referring to the relevant document numbers; 19(b) Asserts no information about which documents would be relied on by which witnesses and in respect of which issue See Annexure HBS2 Asserts that I have not seen any replacement annexures to the witness statements, and the original annexures were uplifted on 3 Sept 09, although the Master Index identifies annexures to the listed witness statements [as 4-5 documents to be relied on] (para 14 and 23) States the indication in the 'Master Index' of reliance on the annexures to my affidavit sworn 12 September 2008 is not correct and was an oversight by me. The annexures contain[ed] files of documents prepared by me and extracted from the records of the applicants, being a summary of the documents which have now been produced in full. The applicants have filed the requested documents in accordance with the directions of the Tribunal (para 8-10) Asserts the Tribunal required that the [Master] list of documents grouped the numbered documents by relevant subject matter [As far as this refers to the Master List, this is incorrect]. Asserts further in my view the Applicants have not satisfied this Direction of the Tribunal as they have not provided a list of documents and have not numbered the documents (para 15) States the documents have been numbered appropriately (para 12). Further, that the numbering that I adopted represents a combination of the file number and the page number (para 13) Asserts the Master Index does not meet the requirements of para 4(b) of the directions which requires each witness to identify the particular documents or group of documents that they will rely on by referring to the relevant document numbers (para 16) Asserts there is a difficulty in identifying which documents support which contentions of the Applicants. I have reviewed the indexes to each of the LVR files and observed that the total number of pages in those files is 18,142 pages (see annexure 1) (para 18) [Not a breach of the directions] States the documents explain how the income tax and goods and services tax liabilities of the applicants have been calculated (para 14) Asserts I have reviewed the indexes to the CZ files and observed that the total number of pages in those files is 4,945 pages. Further asserts there is no further reference in the Master Index or the witness statement that will assist the Tribunal in determining the relevance of any of these documents at all or to the particular subject groups listed in the Tribunal's directions (para 19) [Not a breach of the directions] States the documents explain how the income tax and goods and services tax liabilities of the applicants have been calculated (para 14) Note: Text in square brackets ('[]') added by Applicants